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Thursday, April 30, 2015

The
belief "You can't teach an old dog new tricks" is false, at least as
far as brain science is concerned. It has proven that the brain is far more
malleable than we ever thought. We can develop new relationship, communication,
and money-management skills at any age, especially with mindfulness training.

Mindfulness
allows you to set aside the instantaneous, unwholesome thoughts that limit
one's ability to think of creative solutions and embrace more positive,
wholesome ones, laying new neural pathways and building what I call,
mindstrength. This is the ability to very quickly and easily shift out of a
reactive mode and become fully present in the moment. It gives you mastery over
your thoughts and feelings, opening your eyes to whether the products of your
mind are useful tools for self-discovery or merely distractions.

Often,
unwholesome, painful thoughts are about the past and the future, or cause and
effect: You might think, "If I wasn't able to do that in the past, I won't
be able to do that in the future" and "Because of what I did in the
past, I can't create the future situation I'd like." Again, by applying
mindfulness training, you open a doorway to a mindful-inquiry process in which
you can examine these beliefs and let go of a sense of being stuck or trapped.
Painful and fearful thoughts about the past and future will prevent you from
focusing on the present, and accepting where you are at this moment in time.

Here
are three mindful techniques from my book, Wise Mind, Open Mind to help you shift painful
afflictive thoughts and feelings.
Step One: Examine Unwholesome Thoughts

When
distorted and unwholesome thoughts arise, stop, observe what you're thinking,
and ask yourself, "Is this true?" You can consider the evidence that
it is and weigh that against the evidence that it isn't, keeping in mind that
extreme statements such as "I'll never..." or "It always happens
that..." are almost certainly distortions. Using logic and reason, you can
analyze a situation and determine whether you were assuming a worst-case
scenario, and consider what the best-case scenario and even the most likely
scenario are. If you don't know whether a particular negative thought is likely
to be true, you can explore the possibilities instead of being pessimistic and
assuming the worst.

Step
Two: Replace Unwholesome Thoughts with Wholesome Ones

Ideally
it is best to work with a mindfulness trainer or a therapist to help figure out
specific wholesome, remedying thoughts. It this isn't possible, then write out
the replacement thoughts. When you first begin using this remedy of a positive
thought, feeling, or sensation, you're likely to feel resistance, as the old
neural pathways in the brain protest, "But this isn't true!" One way
to get around this obstacle is to design remedying thoughts that feel true in
the moment. Instead of trying to replace an unwholesome feeling of longing and
emptiness with the belief, "I'm going to meet the love of my life very
soon," you can remedy that afflictive feeling with a thought such as
"I'm doing all the right things to attract and create a healthy, loving partnership,"
which is less likely to arouse feelings of dishonesty, discomfort, or
embarrassment. In mindfulness training, you actually teach the mind to create
wholesome thoughts, and in so doing, you reprogram your brain, replacing old
neural networks with new ones that foster creativity and optimism.

Step
Three: Reinforce New Wholesome Thoughts

Once
you've generated a new positive and healing thought, make a point of saying the
words silently or aloud every time you witness yourself thinking negatively.
Let's say you're experiencing the recurring negative thought, "I'm no good
with numbers." First look back to the source of that belief, examining
your past. You may simply need to notice that your mind is creating a negative
loop of self-talk, comprised of self-defeating thoughts. By adopting the new,
wholesome thought, "I'm fully capable of learning anything I wish to
learn," your mind flow will begin to shift and travel on a more wholesome
course.

Creative
individuals have learned the habit of rejecting limiting, constrictive
thinking. They allow the witnessing mind to arise, look at an obstacle, and
say, "Perhaps that's true, but let's sit with that idea for a while."
In Buddhism, we say that a constrictive quality of mind keeps mind flow within
a narrow range of awareness, while mindfulness allows us to drop our
limitations and ultimately enter the creative space of open mind.

Big city life doesn't have to mean overwhelming smog and
environmental anguish.

In fact, according to a new study by NerdWallet.com, those seeking a greener lifestyle have several great options
to choose from.

NerdWallet gathered statistics from the 150 largest cities in
America to determine which are the most environmentally friendly. The analysis
was based on environmental quality, methods of transportation, sources of
energy and housing density.

Honolulu, Hawaii, with its excellent air
quality and extensive adoption of solar
technology,
topped the list. According to the U.S. Energy Information Administration, 12 percent of the households on the island of Oahu have
rooftop solar panels.
The national average, 0.5 percent of households according to the Solar Electric Power Association, pales in
comparison.

New York City's high public transportation usage earned it the
No. 6 spot on the list, with 56 percent of commuters using its vast public
transit network. Population and residential density worked in many cities'
favor, reducing energy costs for transportation.

Chronic inflammation is a common thread among a wide spread
of conditions like stroke, cancer, obesity, Alzheimer's, heart disease,
arthritis and depression, according to Men's Journal.

Not all sources of inflammation are entirely
preventable: As we age, for example, our immune
system weakens and chronic inflammation is more likely.

While you can't control the number of candles
on your birthday cake, there are measures you can take to reduce the intensity
at which chronic inflammation strikes. Your diet is a good place to start.
Replacing unhealthy eats like processed foods and alcohol with super foods could help. “[Bad
foods] cause overactivity in the immune system, which can lead to joint pain,
fatigue, and damage to the blood vessels,” Scott Zashin, MD, a clinical
professor at the University of Texas Southwestern Medical Center in
Dallas told Health.com.

Alexis Joseph M.S, R.D., author of Hummusapien spoke
with The Huffington Post about the mightiest anti-inflammatory eats. Check them
out below.

Salmon

Fatty fish like salmon provides "a hefty
dose of both EPA and DHA," Joseph said, which are two powerful omega-3
fatty acids that can reduce inflammation and lower risk for cancer, heart
disease, asthma, and autoimmune diseases.

Related foods: Other fatty fish, like mackerel, sardines and tuna.
You can also consider taking fish-oil supplements.

Beets

woodleywonderworks/Flickr

Including beets in your diet has a number of
benefits, including lowering blood pressure, boosting your stamina and -- yep!
-- combatting inflammation. Beets contain a nutrient called betaine, which has been shown to decrease risk for
inflammation.

Related foods: Beetroot juice, beet juice.

Kale

Stacy Spensley/Flickr

Vitamin K, an anti-inflammatory powerhouse, can be found in most dark
leafy greens, like kale. Joseph said that just a single cup of kale provides 10
percent of the recommended daily amount of anti-inflammatory omega-3's (the
kind that can be found in fish) as well.

Related foods:Any dark, leafy green, like spinach and
chard.

Tofu

swwetbeanandgreenbean/Flickr

Soy-based foods like tofu boast
isolflavones and omega 3s, which may help lower levels of inflammation in the
body.

Tomatoes are packed with lycopene, an antioxidant that is an
inflammation-fighter. Joseph said cooking these red fruits will actually
amplify their anti-inflammation properties, since heat brings out more
lycopene.

Related foods:Tomato juice and colorful veggies with low levels of
starch, like peppers, squash and greens.

Blueberries

brx0/Flickr

Blueberries get their bright blue pigment
from a class of antioxidants called anthocyanins, which fight inflammation.
"Studies suggest that increased
blueberry consumption not only reduces oxidative stress, but also increases
anti-inflammatory cytokines and natural killer cell counts," Joseph
said.

Related foods: Raspberries and strawberries. Frozen berries do not
loose their antioxidant capacity -- so feel fry to buy them in the freezer
aisle.

Almonds

ynameisharsha/Flickr

Like fish, almonds are rich in
anti-inflammatory omega-3's. Joseph said the nuts are also packed with vitamin
E, which helps "lubricate the joints and protect the body from
pro-inflammatory cytokines."

Related foods: Nuts!

Tart Cherries

YoAmes/Flickr

Tart cherries, which are supremely high in antioxidants, have been studied to find
that they greatly combat inflammation. In one study, long-distance runners who
drank tart cherry juice on race day had less inflammation and recovered faster
than those who didn't have the juice.

Related foods: Tart cherry juice.

Garlic

quinn.anya/Flickr

Garlic is often touted for its medicinal
properties. The vegetable can add anti-inflammatory to its long resume, as research has found that it prevents
inflammatory substances called cytokines from developing. Better yet, heating
garlic increases its anti-inflammatory effects (which is great, because eating
raw garlic doesn't sound too appealing).

Related foods: Onions.

Extra-Virgin Olive Oil

USDAgov/Flickr

"Olive
oil is rich in polyphenols and heart-healthy monounsaturated fats that help
kick inflammation to the curb," said Joseph. According to Arthritis Today, the oil has similar
anti-inflammatory effects as ibuprofen and aspirin.

Related foods: Avocado oil has similar benefits and a higher smoke
point than olive oil, which makes it idea for cooking with high temperatures,
Joseph said.

San Francisco offers much more than the touristy delights of
clam chowder.
Haight-Ashbury, the hippie enclave for one, is now a gourmet-chic destination

Strangely, it is not the Golden Gate, not even Boudin's sour dough
bread or clam chowder on the pier that's on my mind as the plane touches down
on the tarmac in San Francisco. In stead, all I am thinking of is, well,
weirdly enough, scones! At Heathrow's Galleries lounge, where I have stayed
firmly put -skipping London's summer rush, for almost half a day's worth of
doing nothing but gorge on champagne, WiFi, food and the British press -the
highlight has been a high tea of sorts in true Brit style. The scones have
stolen the show warm, buttery, with real clotted cream; not the flaky glazed
kind that have been fashionable the world over for a while now. The treat has
been repeated at 30,000 feet on the BA flight, and despite a dry mouth and a
palate unable to taste very much besides Tattinger, I have found the carb
comfort so, literally, heady that I can't get the memory out of my mind.

As it turns out, scones are not so inappropriate even on the other
side of the Atlantic. Frisco, the epicentre of so many gourmet fads -right from
those food trucks to Edison-bulb-lit, stripped-down bars and organic lattes -is
high on British style high teas just now. And scones form part of virtually
every fashionable menu.

Tea rooms abound -from Lovejoy's Tea Room on Church Street, done
up like an intimate European parlour, to Dartealing that serves up robust fish
and chips alongside scones and wafer thin sandwiches even as you watch a
Giant's game. Also, there are places like at the Palace Hotel, with its high
ceilings, crystal chandeliers and heritage art works, that offer you charm ing
3 o'clock ceremonies of dainty porcelain cups alongside silver trays piled up
with all that nosh you associate with British aristocracy. But then Frisco is
perhaps the most European town on this continent, and this is just one of its
laidback charms that you discover when you go beyond the touristy.

Culture Counter

Back to basics and tradition may be a current trend. But San
Francisco's soul has always been entrenched in its counterculture. This after
all has been home to the world's first gaybourhood in Castro, to the Beat gen
bohemia in North Beach and to, of course, the hippie movement.

Haight-Ashbury, one of the world's most famous neighbourhoods
after that Summer of Love, is now a tourist magnet.The erstwhile hippies have
long sold their Victorian houses and while it may be possible to buy some of
their psychedelic trance -as also rock, punk, indie -at Amoeba Music, a store
that has the biggest music record collections you are ever likely to encounter,
there are fewer chances of you finding the “stuff“ unsolicited on the streets
or even in cafes and bars in this neighbourhood, once dubbed “Hashbury“.

What Ashbury seems to have turned into, instead, is a gourmet-chic
destination. The liberalism that it celebrates today has more to do with
pushing culinary boundaries than personal ones. It is a good idea to walk
through the district, delving into the unexpected pleasures of its many trendy,
boutique-y but cutting-edge dining spaces.

Bacon Bacon lies at the very edge of Ashbury, almost in Mission
District. It's a food truck now turned into a café. The décor is basic:
bar-style tables and stools, menu on the board over the counter, a big rocking
pig on which you can get cheeky pictures clicked! The idea behind the café is
simple too, as its name suggests. You can come here for breakfast, lunch and
dinner and eat, well, bacon -in different forms.

The idea of single-ingredient restaurants and cafes is emerging as
a hot new trend globally.And the popularity of bacon refuses to fade away. It
is one of the hottest ingredients that chefs love to play with. At Bacon Bacon,
you see evidence of all the quirky possibilities. From triple pork tacos to,
well, homemade bacon scones (yes, we told you, they are hot property), the café
cooks everything on its menu with 2,000 pounds of its salty preferred meat
every month! Bacon Bacon's neighbours tried to shut it down because of the
smell of pork that hung in the air -though one can't understand what that fuss
may have been about! At the Citrus Club, the ingredients in focus are again
simple and to-the-point: Noodles and citrus juice. Post a night of hectic
partying, this seems the go-to place for your bowl of comfort ramen, except
that the noodles -scores of different kinds -are all cooked in citrus juice
instead of oil! Well, health is always a trend in this part of the world.

Back to Classics

In the 1980s, cafes at Ashbury became centres for San Francisco's
comedy scene. Several well-known careers were launched, including that of
Whoopi Goldberg and the late Robin Williams. The Other Café, where both started
out, does not exist today. But there are other cafes and bars that replicate
that casual, chatty, arty vibe.

Alembic is the trendiest of the lot. A pioneer of the craft
cocktail movement, this one has a deliberately uncultivated garden, where fresh
herbs (not what you think; lemon-basil, pineapple-sage, and many such `double
flavours') are grown. The herbs find their way into near perfect drinks using
only fresh ingredients. Half the menu is devoted to the 1920s style Classics
(they do their Old Fashioned with a local Bourbon, obtained by the barrel). The
other half comprises of “new school“ tipples such as the Bait and Switch (a
fruity and smoky mix of mescal, Chareau Aloe Liqueur, strawberries, lemon
juice, peppercorn syrup and green strawberry bitters). Bar snacks could be the
likes of pickled quail eggs, and duck heart (a special here). It's a great
hangout for all kinds of people -ageing hippies, cocktail fanatics, locals and
luckily very few tourists.

But the hottest trend in Haight-Ashbury has to be food halls.
Trucks are almost passé -what with the inconvenience of having to keep up with
their impermanence. Food halls that incubate small, often quirky businesses are
the latest buzzword.

The famous Red Vic Movie House, the only one in the city to be
owned and oper ated by workers till it closed down some years ago, is now a
food hall offering tastings of everything from Russian peroshki (baked
dumplings) to organic ice-creams, buckwheat crepes and raw, cold-pressed juice
personally mixed by an “alchemist“ who has a near magical, herbal cure for
anything from hangovers to old age! All these are independent businesses,
testing the waters as it were before striking out in bigger formats. The food
hall has a theatre, where some of these -and other -experi ences can be
savoured in close groups, much unlike the mayhem and hustle bustle of what you
may find at the Ferry building, Frisco icon and the biggest possible food marts
around with all manner of bespoke, artisnal stuff available.

Two Sides...

One way to see San Francisco is to do all the things most people
descend here to do -take a boat tour to the Alcatraz, see the sea lions, stay
put on pier 39, drive down the “world's most crooked street“ and eat at all the
fancy Michelin rated restaurants that have made vegan, raw, local gastronomy
and the like very very fashionable.

The other way to do it is to just wander around, may be take a
lazy ride on the cable car, layer up and breathe in the spirit of this 7x7
city, alternating in the warmth of the sun and the chill of the cold wind from
the Bay. If you choose to do the latter, the results are far more rewarding.
What becomes evident almost at once is the laissez faire attitude of the city
-where the very names of establish ments, of stores and restaurants, proclaim
that sense of quirky, individualistic fun that once made Frisco famous.

In Castro, where the rainbow flag flutters in the wind proudly and
where the names of LGBT activists are inscribed on stars on the street
walkways, the wittiest nameboard I encounter is: “Does your mother know?“ It's
the name of a shop selling, well, adult stuff. Naturally. There are scores of
gay bars that you could walk into at dusk, including The Twin Peaks, a Frisco
institution, the first gay bar in the world to have full-length glass windows.
Before that these were dingy, dark holes, where men would go surreptitiously
for a drink and company, fearful that their genteel landlady may spot them in
that den of vice and render them without a roof on their heads.

In North Beach, the other liberal enclave steeped in colourful
history, sandwich places like The Naked Lunch summon up memories of the Beat
poets, the post World War II generation of bohemians and writers who rejected
boundaries both in fact and fiction. City Lights, the iconic bookstore (and
publisher; Ferlinghetti's press produced works such as Howl and The Naked
Lunch) still stands sentinel at one corner. Restaurants like the Stinking Rose,
a garlic-only restaurant -everything from starters to desser t has copious
amounts of the ingredient -push boundaries, proclaiming on free takeaway
postcards that it is “chic to stink“. But really where I find myself heading
back every day is to Ashbury. There's a laidback-ness to the district that
defies all American stereotypes. The last of legit neighbourhood cafes still
exist, in the face of Starbucks-isation. And their names say it all. Coffee To
The People and Central Café are both congregation points for the local community.
You can have a veg lasagne, strong coffee, read a radical book, and possibly
pass around a petition or two for your pet cause. For a taste of the
yesteryears, this is the only place to be.

What trends and
technologies threaten to upend established business models and wipe out
slow-to-adapt companies, leading to the next generation of S&P 500 companies
and IPO hopefuls?

You'll find no
shortage of analysts and other experts ready to answer this question—and it's
not just a tech utopian vision of the successful company of the future.

Here are six
seismic shifts, from cutting-edge technology and workplace trends to consumer preferences, that today's
company leaders need to be thinking about before it's too late.

1. 3-D printing's inflection point.

3-D printed guns.
3-D printed vital organs. "We get caught up in the end of the journey
with 3-D printing," says Mike Walker, an analyst at
market research firm Gartner. "The real opportunity isn't the widget. It's
the intellectual property you're creating."

Plans for all
manner of products, parts, and supplies will become available for download,
similar to music files (even suits based on 3-D body scans, as in the image
here). Walker says the real business winners could be the designers who
stand to earn royalties for each download, in the same way the IP owners of
songs and movies do.

The question is:
What designs will be commonly downloaded and printed, not only by consumers but
also by businesses? That's where things get interesting. There are sure to be
plenty of everyday items, but you can't rule out a future in which automakers
download and print out cars and surgeons print plastic medical
models on which they can practice complex procedures.

2. Advertising inside the headphone.

So you might be
wondering why Microsoft spent $2.5 billion to buy the maker of video game
Minecraft.

Here one reason:
They may be envisioning an entirely new and highly effective advertising
opportunity in games like Minecraft, says Forrester Research's James
McQuivey, an analyst who tracks the digital disruption of traditional
businesses. An automaker, for example, could create a Minecraft setting in
which consumers design their own cars (complete with fun added elements, such
as cats or celebrities) or virtually experience cars built by other users.

In a game setting
like this, McQuivey says, advertisers could potentially construct a brand
experience and present it to prospective customers whose game-playing
preferences make them likely sales targets. "Right now, companies go into
these [gaming] environments and put up a billboard," he says. "But
that's not nearly as interesting as getting people to interact."

By interesting, he
means not only effective but transformative: An audience will no longer be a
passive spectator to an advertisement, but an active participant in it.

3. A work perk that'll never be the same.

Researchers at
S&P Capital IQ made waves when they predicted in a recent report that the
common practice of getting health insurance through employers was inevitably
going away.

Why is it
inevitable? Mainly because employers stand to save a whopping $700 billion
between 2016 and 2025 by shifting from employer-paid insurance to simply
providing stipends through which employees can buy their own policies on
independent exchanges made possible by the Affordable Care Act.

There's a big
"if" looming in the Supreme Court decision on the ACA, over which the
high court just heard arguments, but if the justices uphold the law for a
second time, this trend will be analogous to the shift from employer pensions
to 401(k) plans, says Michael G. Thompson, managing director at S&P Capital
IQ.

"The
government will change the rules, and the IRS will back down and allow
stipends," Thompson says. The winners, in his opinion, will be the
companies that figure out how to get a piece of the revenues that these
soon-to-be-emerging health care exchanges are bound to generate

4. The end of recruiting from campuses.

Like health care,
education is an area rife with "bloated, rising costs, incredibly
unchecked by anyone," Forrester's McQuivey says. In response, more current
and future members of the work force are "ridding themselves of the need
to use the current systems," he says. In other words: You don't have
to go to college to prove yourself as a programmer. Instead, you can save
time and money by taking online courses.

And that's just one
industry. Although Massive Open Online Courses (MOOCs) have been around for
more than a decade, they continue to gain momentum as an alternative to the
pricier and more time-consuming coursework of traditional education.
While it's an exaggeration (at least at this point) to say that the
MOOC trend will render obsolete the prestige and connections that come from,
say, earning an MBA the old-fashioned way, there's no question online courses
are already saving time and money for both students and businesses.

Goldman Sachs, for
example, has partnered with MOOC provider Udemy to train and bring on board new
hires. "From the firm's perspective, we can customize content based on
what they already know and measure their progress, as well as the program's
impact," Jason Wingard, Goldman Sachs's chief learning officer, wrote on Inc.com. "And when they finally do arrive on
campus for orientation, participants are better prepared and thus start on a
more level playing field."

5. When Walmart's cart is left empty.

In their new
book, Retail Revolution: Will Your Brick-and-Mortar Store Survive?,
Harvard Business School faculty members Rajiv Lal and José Alvarez and former
HBS research associate Dan Greenberg forecast hard times for
one-size-fits-all brick-and-mortar retailers, including Walmart Stores.
"Walmart is now buffeted by three sources of competition," says
Lal. Those three are e-commerce companies, from Amazon down to
one-product specialists; increasingly efficient and profitable supermarkets; and
the growth of dollar stores. "Their business model used to work, but now
it's under stress," Lal says of Walmart.

That means the
model for smaller brick-and-mortar retailers is in trouble as well. While
analysts have predicted a brick-and-mortar apocalypse before, Lal and his co-authors
say that today's online threat is different and more lethal than anything
traditional retailers have faced in the past.

6. A consumer with a new idea of comfort.

There are two
habits in particular that smart companies are baking into their business
models. First, there's the idea that Millennials conduct online research before
buying. This highlights the importance of credible customer testimonials,
especially those shareable on social media. As an example, David Bell, a
professor of marketing at Wharton, cites the marketing efforts of Casper, a New
York City-based manufacturer and online mattress retailer. Casper's product
reviews are sortable by categories, such as whether you're a side sleeper and
whether you sleep with a pet. "You can go onto their site, find a review
by someone who's essentially a clone of your own sleeping type, and that can
give you some confidence as a buyer," Bell says.

Second, and maybe
because Millennials trust so much in online information, they tend not to care
as much about trying the physical product before buying it. Increasingly,
consumers can buy a product first and easily return it if they dislike it.
Casper and its competitors in the direct-to-consumer mattress space offer
generous return policies with long trial periods.

Harvard Business
School's Lal says he has seen this trend play out both in his research and with
his own children, who are in their 20s. "When they think about shopping,
they think about the internet," he says. "It's the first place they
go to. It doesn't matter if it's shoes or a coat. These are categories I
would've told them, 'Try it out, see how itlooks, how it feels.'
Their response is, 'We'll buy three and return two of them.'"

An all-in-one, one-for-all formula to determine
R&D’s productivity can help companies see how well the function is
performing.

The question of
R&D’s productivity has
long resembled a Gordian knot. Look nearly anyplace else in today’s
corporations, and there’s far less difficulty measuring productivity and
performance. In manufacturing and logistics, you can get a sense of things just
by looking around the production floor, the inventory room, or the loading
dock. Even the performance of the advertising budget—once famously opaque—is
now, thanks to digital technology, much easier to see.

But the R&D department provides fewer
clues. There’s no flow of tangible goods through the process, for one thing, but
rather a stream of ideas and concepts that resist the efforts of efficiency
experts and innovation gurus alike. In the face of this difficulty, most
companies fall back on a few well-worn approaches: R&D as a percentage of
revenue, the ratio of new products to sales, or the time it takes for new
products to reach the market. None of these really gives a good idea of how
well the R&D function is performing, either overall or by team—nor is it
clear why (or when) any given project might suddenly prove a failure though it
had earlier shown every promise of success.

We have endeavored to address this
long-standing puzzle. We may not have answered it definitively, but we have
developed a formula we believe will be useful to any company that wants to
establish and maintain a comprehensive and transparent overview of the R&D
organization’s many platforms, hundreds of projects, and thousands of
engineers, technicians, program managers, and lab workers. Just as Alexander
the Great is said to have undone the Gordian knot by the simple expedient of
slicing through it with his sword—rather than trying to unravel it by hand, as
others had attempted to do—our formula makes relatively quick, simple work of a
knotty problem.

This formula takes a novel approach to
measuring R&D outcomes: multiplying a project’s total gross contribution by
its rate of maturation and then dividing the result by the project’s R&D
cost. Since proposing this idea, we have worked with several companies to test
it and introduced it to a diverse group of approximately 20 chief technology
officers (CTOs) and other senior executives in a roundtable setting. So far,
the formula demonstrates several virtues. First, it’s a single metric rather
than a collection of them. Second, it aims to measure what R&D contributes
within the sphere of what R&D can actually influence. Finally, by measuring
productivity both at the project level and across the entire R&D
organization (the latter through simple aggregation), it endeavors to speak to
the whole company, from the boardroom all the way to the cubicle. Refinements
to the approach may be necessary, but for now at least, the formula seems to
represent an advance in measuring R&D’s productivity and performance.

The case for a new
approach

Before describing the
formula in greater detail, let’s examine what doesn’twork in
today’s approaches to measuring R&D’s productivity, and why that matters.

Today’s flaws . . .

The most common
approach takes the ratio of R&D’s costs to revenue. This method divides
revenue from products developed in the past by what’s currently being spent on
products for the future. That might be useful in a stable or stagnant company
whose prospective revenues are expected to grow very steadily or to remain
flat. But for any other company, this assumption is artificially pessimistic
for investing in future growth and falsely optimistic when the product pipeline
is weakening. Indeed, repeated studies have shown no definite correlation between
this R&D ratio and any measure of a company’s success.1

Not that anything
better has been proposed in the past—and not for lack of trying. One academic
paper2 found no single, top-level metric and therefore
recommended that companies instead use a suite of metrics at different levels
of the organization.

. . . and why they
matter

Maybe at one time, R&D’s productivity
mattered less. But today, myriad competitive forces drive down R&D budgets,
and nearly every company we know—even those investing heavily in
growth—continues to ask the R&D organization to achieve more with the same
or fewer resources. (One CTO admits that his method is “to keep turning the
budget dial down until the screaming gets too loud”; that’s when he knows he’s
hit the right level.)

Meanwhile, as product variations, functional
requirements, and customization needs (to say nothing of regulatory demands)
proliferate, the complexity and cost of R&D continue to rise. Small wonder
friction arises between R&D managers, struggling to articulate the scope of
the challenges they face, and other executives, who are frustrated with the
rising cost of product development. In some industries, such as semiconductors,
where Moore’s law is pushing the limits of physics, this friction is acutely
apparent.

At the source of the frustration is the
difficulty of generating lasting R&D-productivity improvements at many
companies. One reason is the lack of repetitive tasks, at least compared with
other parts of the organization. Another is the more frequent reshuffling of
R&D project teams.

Moreover, R&D managers usually can’t
identify troubled projects until they’re well into an escalating spate of
costly late changes and firefighting. Many of the technical shortfalls of
products become clear only just before they are introduced into the market. As
a result, it’s often hard to determine, in the fire drill that accompanies the
last weeks and months of a troubled project, exactly what all the engineering
hours were spent on and who spent them.

A new formula

When you dig more deeply into the R&D
conundrum, you quickly encounter the problem of measuring what the R&D
organization actually accomplishes—the outputs, so to speak. Any formula for
productivity by definition divides outputs by inputs. The input variable, in
this case, is straightforward: the cost of an R&D project. That’s the one
used by most existing measures of R&D’s productivity and the one we too
decided to use.

To capture the outputs—a stickier task—we
settled on using, first, the gross contribution of a project and, second, a
complementary measure: the rate of maturity, or a project’s progress toward
meeting its full technical and commercial requirements. We chose these measures
for their overall explanatory power and the visibility they provide into
certain aspects of the R&D process. They come together in the formula shown
in the exhibit.

A simple formula
provides companies with a single measure to assess the productivity of the
R&D function.

We chose total gross contribution as one part
of the formula’s numerator because it represents, over time, a product’s
economic value to customers, while keeping fixed costs out of the equation.
That allows us to home in on what R&D can directly influence. Also, by
looking at the total gross contribution of projects over time, companies can
highlight information that helps to evaluate the projects they have in process
and to continue or cancel them. That nicely ties the metric to one kind of
behavior it’s meant to influence.

How do we know what the gross contribution is?
Looking back in time, it’s easy enough to determine. Thus, when a company
calculates a project’s rate of maturation (a step we’ll describe in a moment),
it can determine a completed R&D project’s productivity retrospectively.

However, when executives consider a project
that’s in process or has yet to be started, they don’t know whether it will capture
its potential gross contribution and must instead rely on a credible and
reasonably accurate estimate. The more accurate the forecast, the better the
formula will work as a leading indicator. You could even say, from a skeptical
point of view, that the formula is only as good as the estimates that go into
it—which is true, as far as it goes. But even for companies that tend to be
overly optimistic or pessimistic in their business cases, faulty estimates will
provide at least a basis for “go/no-go” decisions about different projects. In
addition, even a flawed estimate can be used to see, earlier in the evaluation
process, whether a project’s productivity is dropping relative to the forecast.
This is often a reliable indicator that a project won’t return its predicted
gross contribution.

That said, the formula we propose will work
best for companies with incremental R&D processes and less well in
start-ups with more uncertain R&D spending.

Achieved product
maturity

While a project’s gross contribution may be
necessary to measure R&D’s output, it’s not sufficient, because it isn’t
earned all at once but rather over time. The likelihood that a project will
attain the projected gross contribution depends, in part, on the maturity of
the product at the time of its market introduction—how close it is to verifying
and validating its technical and commercial requirements. (Of course, other
factors also influence whether a given product or service captures its full
potential, including how well it was marketed and how well the company timed
its introduction.) Our experience shows that the closer to full maturity a
product is when introduced, the better the chance that it will fulfill its
expected gross contribution.

That’s not only because the product-maturity
rate largely determines time to market but also because late changes to a
developing product typically cost more to fix than earlier ones. Such late
changes might, for example, require a company to rework expensive tooling or to
redesign interface components or features. Higher costs mean a lower gross
contribution.

The implication is
that companies must be able to assess, in real time, how close their R&D
projects are to full maturity. Few companies may in fact have this capability,
but a rough-and-ready version of such a system can be built
fairly quickly, often in two to three weeks. To do so, a company simply looks
at critical dimensions (such as cost, functionality, and quality) during each
of the quality gates a project passes through in its development. These provide
a fair proxy in a rudimentary system if they are reported in consistent fashion
throughout a company.

But if we are going to find the precise
productivity formula we’re seeking, we need a more sophisticated and systematic
method—for example, one that checks on a project’s progress toward meeting its
performance requirements within a narrowing allowable deviation corridor over
its lifespan. This method uses technical and commercial metrics specific to
each product instead of the more generic metrics used in the rough-and-ready
version. It lets companies drill down to the maturity of single components
within a project and to zoom out and gauge the maturity of an entire product
and service pipeline.

Of course, there’s a broader reason, beyond
time to market, why the rate of maturity is an important measure of the R&D
function’s output: designing and maturing the products that the strategy and
marketing functions conceive is the primary reason R&D exists.

Integrating the
elements

These three elements—total gross contribution,
rate of maturity, and cost of R&D—come together in a formula that attempts
to quantify R&D’s overall performance and to shed light on separate aspects
of productivity. This, in turn, facilitates more confident managerial interventions
to improve them.

By weighting projects according to their
expected gross contribution, for instance, we keep our focus on efforts
critical to a company’s success, while also articulating the value R&D
generates over a defined time period. By tracking the race to a mature product,
we make sure R&D gets credit for its value contribution only if it delivers
such a product. Projects that reach maturity in timely fashion are acknowledged
for having justified the full business case for them. Project teams that launch
immature products, which are less likely to capture their full expected gross
contribution, get penalized.

The formula’s usefulness, then, lies in the
way it drives the right behavior. By more heavily weighting projects forecast
to make a higher gross contribution, our approach helps focus management’s
attention on the ongoing projects most critical to a company’s future success.
Furthermore, the formula encourages a faster time to market, since products
that reach maturity more quickly will show a higher level of productivity.
Finally, the formula encourages the efficient execution of projects because
those that consume less investment will also have a higher productivity value.

The formula in action

Measuring productivity, valuable though that may
be, is just a starting point—it won’t change R&D’s efficiency on its own.
The formula must be integrated into existing management processes or lead to
the creation of new ones. One company used the approach to perform a one-time
analysis looking at all of its R&D projects for the previous five years.
The idea was to establish a baseline R&D-productivity measure that would
serve as a yardstick for future efforts. To see how productivity is changing,
the company now runs each of its current projects and each of its project teams
through the formula two and four times a year, respectively. It will take a few
years before the company can trace the results all the way to specific products
and their marketplace performance. But already, we can see its benefits when
confronting some perennial challenges: setting the direction of R&D,
improving the performance of teams, making decisions, and driving change.

Setting direction

A key benefit of this productivity formula is
its ability to address, through a single metric, all levels of the
organization—from individual engineering teams to the full R&D pipeline. As
such, it provides a backbone for an integrated performance-management system
that unifies an entire company’s R&D efforts. This unity comes with significant
flexibility: companies can select separate parts of the formula to gain
insights into the different elements of the R&D function and thus to
influence both the particulars and the whole.

CTOs can convincingly quantify for their
boards any increase, over the preceding year, in the productivity of the entire
R&D organization by annually measuring its productivity. By looking only at
the numerator, executives can report R&D’s overall value contribution. By
multiplying the product portfolio’s expected gross contribution by the
respective increase in maturity achieved over the measured time period, they
can determine the total value R&D generates.

And that’s not all. By taking the formula’s
left-hand elements—the total gross contribution and R&D costs of individual
projects—executives can develop a metric to help prioritize the overall
product-development pipeline and thereby make better portfolio and
resource-allocation decisions. (Are critical and valuable projects being
deprived? Has organizational momentum allowed bloated projects to consume too
many resources?) And by looking at the formula’s right-hand elements—the rate
of maturation divided by the cost of R&D—executives can better assess the
efficiency of working teams. Such transparency is a powerful tool for improving
their performance.

Improving teams

In any R&D organization, some teams
perform at an extremely high level and others struggle. This range of
performance can be difficult to identify, at least objectively. Naturally,
individual managers often have an instinct for high-performing teams but lack a
means to quantify that performance or to make comparisons.

Publishing a ranking of productivity by using
the right-hand elements of the formula—the rate of maturation over the
corresponding R&D cost—makes a team’s performance immediately apparent.
Obviously, that insight does not, in and of itself, drive improvement. But by
enabling investigations into what specific kinds of behavior truly make teams
excel, the formula provides an important first step.

Companies can therefore avoid the broad,
one-size-fits-all improvement approaches that rightly make executives leery.
Particularly in large organizations, it’s almost impossible to improve all the
engineering teams at once. The starting points and improvement needs of
different projects and teams are simply too diverse. Companies are better off
focusing their limited resources on teams with the most potential for
improvement. By applying the methodology described here, a company should avoid
employees’ “not invented here” hostility toward the practices of external organizations.
The practices identified through the formula, after all, are internal to the
company that carries out the analysis, and lower-ranking teams can simply walk
across the hall, so to speak, to see and learn from their higher-performing
peers.

We have seen R&D teams that apply internal
practices commit themselves voluntarily to improving their performance (in the
most important indicators) by more than 20 percent, on average. One company,
for example, significantly increased its ability to hit its technical
objectives by implementing a systematic process for the engineering release of
a highly complex industrial component.

Making objective
decisions

This productivity-based method improves the
management of R&D in a third way, as well: by providing an objective and
numerical basis for making decisions and setting targets. It bypasses
gut-feeling decisions and the sort of arbitrary budget and
performance-improvement targets so often divorced from the reality of R&D
challenges. The formula allows executives to better understand the demands
they’re placing on the function in the context of its historical productivity
performance, creating a more reliable budget for the product-development
portfolio. When executives know the productivity of individual R&D teams,
they can calculate the likely cost of a project, even down to the contribution
of individual functional areas.

Driving change

The transparency this system of performance
measurement provides is an invaluable companion to any large-scale
R&D-productivity initiative. Compared with initiatives in other parts of a
company—for example, programs to reduce the cost of materials, where any gain
is very tangibly demonstrable in the piece price—improvements in R&D are often
ephemeral. In our experience, many large-scale transformations identify
millions of dollars in R&D-efficiency benefits only to leave the function’s
budget unchanged.

Our method allows managers to measure a change
program’s impact objectively. And even if the R&D budget does stay the
same, faster or better development should be reflected in overall productivity.
By quantifying the impact of any change program, moreover, executives will be
better able to communicate its success in a credible and convincing way.

R&D is one of the few areas that often remain opaque to
executives in today’s corporations. Quantifying what it actually accomplishes
has resisted the efforts of executives and academics alike. By clarifying the
outputs, the simple formula proposed here endeavors to generate a single
measure companies can use to determine and agree on the R&D function’s
productivity—the better to assist decision making and to improve performance.